Microsoft announced today that it was effectively killing its KIN phones, according to numerous news reports. Verizon will continue to sell the phones, but there will be no European expansion, and the KIN team will be folded into Windows Phone 7:

“We have made the decision to focus exclusively on Windows Phone 7 and we will not ship KIN in Europe this fall as planned,” the company said. “Additionally, we are integrating our KIN team with the Windows Phone 7 team, incorporating valuable ideas and technologies from KIN into future Windows Phone releases. We will continue to work with Verizon in the U.S. to sell current KIN phones.”

According to our source, the birth of these devices began with a decision at Microsoft to create a platform agnostic, cloud-centric featurephone. A featurephone that could be had at a relatively low cost, and sold to a burgeoning market of teens and young adults who had little need for a BlackBerry-level device (or pricing).

It also apparently had an effect at Verizon (“Big Red”), as they backed off providing service for the Kin at low cost:

Apparently when it came time to actually bring the Kins to market, Big Red had soured on the deal altogether and was no longer planning to offer the bargain-basement pricing deals it first had tendered.

It was pretty obvious to everyone that the KIN couldn’t succeed with Verizon’s data plan, although the design of the KIN itself may have made a low cost data plan unreasonable, as the phone was designed to sync to Facebook, MySpace, and Twitter every 15 minutes, and upload a hi-res image to the cloud via KIN Studio for every picture taken.

Even more intriguing in this whole debacle (and how much did Microsoft lose on this deal? A billion dollars? more?) is the conjecture on the power struggles and politics going on as Microsoft figures out how to proceed with their online and mobile strategy. Robbie Bach and J Allard are gone (and has anyone heard from Roz Ho lately? What’s she up to?), and again according to Engadget, Steven Sinofsky is making a play to bring all of Microsoft’s mobile business under the Windows umbrella.